What is the First Home Buyer scheme in NSW, and how does it work?

If you’re a first-time buyer looking to enter the property market, it can be pretty daunting. Luckily, assistance is available in Australia to make homeownership more accessible to first-home buyers.

Some schemes are available at the federal government level. These include:

First Home Super Saver Scheme (FHSS) - Voluntary contributions to your superannuation, which can be used to purchase a first home.
First Home Buyers Guarantee (FHBG) - This a home guarantee scheme where a set amount of homes are guaranteed to eligible first home buyers. Other home guarantee schemes include one for regional areas and one for single parents.

Along with this, you'll find that each state government will provide their own version of:

First Home Owner Grant (FHOG) - This is a federal government scheme, but there are significant differences between states surrounding grant amounts and property value thresholds.
Stamp duty concessions.

If you want to purchase a home in Sydney or elsewhere in New South Wales, you might want to know how these Australian government and NSW government schemes apply to your financial situation.

First home buyers in NSW

There are currently several specific schemes available to first-home buyers in NSW. These are as follows:

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First Home Buyers Assistance Scheme

What is it?

Exemption from paying stamp duty, also known as transfer duty (may be full or partial).

Main eligibility requirements

You must be over 18 years of age.
At least one applicant is an Australian citizen or permanent resident.
Must not have previously owned property in Australia.
For new and established homes: The property value must be less than $800,000 (to receive a concessional rate on transfer duty) or $650,000 (for a full stamp duty exemption).
For vacant land: The land value must be less than $450,000 (to receive a concessional rate on transfer duty) or less than $350,000 (for a full exemption).
At least one of the first home buyers must move into the home as a principal place of residence within 12 months of buying the property and live there for six continuous months.

Other requirements can be found here.

First Home Buyer Choice

What is it?

As of November 2022, first-home buyers in NSW can opt to pay annual property tax instead of the upfront cost of stamp duty.

Main eligibility requirements

You must be over 18 years of age.
At least one applicant is an Australian citizen or permanent resident.
Must not have previously owned property in Australia.
The property value must be below the $1.5 million threshold.
At least one of the first home buyers must move into the home as a principal place of residence within 12 months of buying the property and live there for six continuous months.

Other requirements and guidelines can be found here.

First Home Owner Grant (New Home)

What is it?

You can receive $10,000 towards your property purchase. This can also be used in addition to the First Home Buyers Assistance Scheme benefits.

Note: these details refer specifically to the NSW Gov application of the First Home Owner Grant (FHOG), also known as the First Home Buyer Grant, which has different restrictions and benefits to other states.

Main eligibility requirements

You must be over 18 years of age.
At least one applicant is an Australian citizen or permanent resident.
Must not have previously owned property in Australia.
In NSW, this must be used on a newly built or significantly renovated property OR vacant land with plans to build.
For a newly built or significantly renovated property: The purchase price must not exceed $600,000.
For vacant land with a contract to build: Combined value of the land plus the value of the building contract for the home must not exceed $750,000.
At least one of the first home buyers must move into the home as a principal place of residence within 12 months of buying the property and live there for 6 continuous months.

Find out about more eligibility requirements

Shared Equity Scheme (Shared Equity Home Buyer Helper)

Note that this scheme is not exclusive to first-home buyers and may be used by single buyers over 50 or single parents. Eligibility requirements are quite strict, so make sure to check if this applies to you.

What is it?

NSW Government will contribute up to 40% of the purchase price for a new home and up to 30% for an existing home in exchange for an equivalent interest in the property.
No government repayments are required for as long as participants are eligible for the scheme, but voluntary contributions can be made to increase equity in the property.

Main eligibility requirements

You must be over 18 years of age.
You must be an Australian citizen or permanent resident.
First-home buyers must be key workers as one of the following: early childhood educators, teachers, nurses, midwives, paramedics, and police officers (review conditions here).
Must have a minimum 2% deposit.
Gross income must be less than $90,000 for singles or $120,000 for couples.
For Sydney and regional centres: Property value must be less than $950,000.
For the rest of NSW: Property value must be less than $600,000.

Check the rest of the details of the scheme here.

These schemes can’t be used for investment properties - buyers must intend to live in the property in question. Note that if you are a member of the Australian Defence Force, the requirement to live in your established home for six continuous months may be waived.

Below are how some of the other national assistance schemes apply to residents of NSW.

Other First Home Buyer Schemes Available to NSW Residents

To ease the home loan process for first-home buyers, NSW residents are also eligible for federal government schemes. These may make it possible for first-home buyers to access low-deposit home loans or avoid paying lenders mortgage insurance (LMI).

First Home Guarantee Scheme (or First Home Buyers Guarantee)

What is it?

Each financial year, the federal government sets aside 35,000 places for eligible first-home buyers to put down a deposit on a home with as little as 5% deposit. The government foots the remainder.
You will not need to pay LMI.

Main eligibility requirements

You must be over 18 years of age.
Must be an Australian citizen or permanent resident.
Must not have previously owned property in Australia.
Must intend for this to be the principal place of residence.
Must earn less than $125,000 annually for individuals or $200,000 combined annually for couples.
The loan must be from one of 32 National Housing Finance and Investment Corporation-approved lenders.
Must have a 5% minimum deposit.
For Sydney and other regional centres: Property value must be less than $900,000.
For the rest of NSW: Property value must be less than $750,000.

Find the rest of the eligibility requirements here.

First Home Super Saver Scheme

What is it?

A scheme allowing you to contribute voluntarily to your superannuation, specifically for first-home buyers. $15,000 of voluntary contributions per year can be used, up to $50,000 in total.

Main eligibility requirements

Must not have previously owned property in Australia.
You are an Australian citizen or permanent resident.
You can be under 18 years old to make voluntary contributions to your superannuation, but you must be over 18 years of age to make an FHSS request.
You must be intending to purchase property in Australia.
You will occupy the property you buy or intend to as soon as practicable.
You intend to move into the home within 12 months of purchase (or as soon as practicable) and live there for six continuous months.
You will also need to cover the upfront costs.

More requirements can be found at the Australian Taxation Office.

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What is the Family Home Guarantee?

The Family Home Guarantee is another scheme in the Home Guarantee Scheme that can be accessed by first home buyers, but this specific scheme is only relevant to single parents. The difference with this scheme is that eligible single parents may have owned property before and still qualify for the scheme.

There are 5,000 places set aside each financial year for the Family Home Guarantee.

Eligibility requirements are as follows:

Must be an Australian citizen.
Must be older than 18 years of age.
Must be single (i.e. no marriage or de facto partnership).
Must have a dependent child/children.
Must not currently own a home (may have previously owned a home).
Must intend to be an owner-occupier of the property once purchased.
Must earn less than $125,000 per year.
Must have a minimum 2% deposit.
For Sydney and other regional centres: Property value must be less than $900,000.
For the rest of NSW: Property value must be less than $750,000.

What is LMI and will I have to pay it?

LMI stands for Lender’s Mortgage Insurance, and you will have to pay it if your deposit on a property is below 20%.

After stamp duty, which you may receive a concession on as a first-time home buyer, LMI can be one of the biggest upfront costs in purchasing a property. Low deposit home loans may also attract higher interest rates, as they tend to be riskier for lenders.

This is one of the things that makes the Home Guarantee Scheme so attractive — securing a guaranteed spot allows you to pay a lower deposit, without having to pay LMI.

Note that you also may not have to pay LMI if you work in certain industries: medical, legal, mining, and finance professionals may receive an LMI waiver.

Is it cheaper to pay stamp duty or annual property tax?

Previous to July 2023, the First Home Buyer Choice scheme allowed first home buyers to choose between the upfront cost of stamp duty or the ongoing annual property tax.

As of July 1, 2023, the First Home Buyers Assistance scheme has replace the First Home Buyer Choice scheme. Under the new policy, there are no land tax exemptions, but there are now stamp duty exemptions for first home buyers on properties from $650,000 to $800,000, and stamp duty concessions on homes priced from $800,000 to $1 million.

You can use our NSW stamp duty calculator to work out your approximate stamp duty costs.

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